Gibson v Body Corporate 384911 HC Auckland CIV-2011-404-3240
[2011] NZHC 1371
•16 August 2011
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Judgment: 16 August 2011
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2011-404-3240
UNDER Part 19 of the High Court Rules
IN THE MATTER OF an application under section 40 of the Unit
Titles Act 1972
BETWEEN MELVIEW VIADUCT HARBOUR LIMITED (IN RECEIVERSHIP) AND LIGHTER QUAY HOTEL MANAGEMENT LIMITED (IN RECEIVERSHIP AND LIQUIDATION) Applicants
AND BODY CORPORATE 384911
First Respondent
ANDBESWICK HOLDINGS LIMITED Second Respondent
ANDHOTEL LIGHTER QUAY LIMITED Third Respondent
ANDGRAHAM WILKINSON Fourth Respondent
Hearing: 7 & 8 July 2011
Counsel: R B Stewart QC and A E Simkiss for the former Applicants (Brendon
James Gibson and Michael Peter Stiassny)
No appearance by or on behalf of the First Respondent
P G Skelton and R A Edwards for Second, Third and Fourth
Respondents
Judgment: 16 August 2011
RESERVED JUDGMENT OF ELLIS J
This judgment was delivered by me on 16 August 2011 at 3.30 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
MELVIEW VIADUCT HARBOUR LIMITED (IN RECEIVERSHIP) AND LIGHTER QUAY HOTEL MANAGEMENT LIMITED (IN RECEIVERSHIP AND LIQUIDATION) V BODY CORPORATE 384911 HC AK CIV-2011-404-3240 16 August 2011
Solicitors: Minter Ellison, PO Box 3798, Auckland 1140
Lee Salmon Long, PO Box 2026, Auckland 1140
Anderson Creagh Lai, PO Box 106-740, Auckland 1143
Counsel: R B Stewart QC, PO Box 2302, Auckland 1140
P G Skelton, PO Box 4314, Auckland 1140
[1] This judgment represents a further chapter in the vexed recent history of a unit titled complex in the Viaduct Basin from which (inter alia) the Westin Hotel has historically operated. It concerns the second application for the appointment of an administrator under s 40 of the Unit Titles Act 1972 (the UTA) to have been made in less than 12 months.
[2] The first such application was made by the unit holders now represented by the fourth respondent. That application was opposed by the Body Corporate and the receivers of the present applicants and was declined by Heath J on 2 September 2010 in Low v Body Corporate 3849111 (the Low judgment).
[3] Conversely, the present application was initiated by the receivers of the present applicants and is now continued by the companies themselves.2 It is opposed by the fourth respondent (who, as I have said, now represents the interests of the unit holders who made the first application) and by the second and third respondents (which are companies owned and/or controlled by the fourth respondent). In this instance, however, Body Corporate 384911 (the first respondent) abides the decision of the Court.
Background
[4] There are a total of 173 hotel rooms or serviced apartments (residential units) in the unit titled complex. The first applicant, Melview Viaduct Harbour Limited (in receivership) (MVHL), owns 16 of these residential units and all of the “management” units, which include a restaurant, gym and spa, a sundries shop, a bar
and a reception and back office area. The units owned by MVHL have 24.2 per cent
1 Low v Body Corporate 384911 HC Auckland CIV-2010-404-5280, 2 September 2010.
2 Messrs Gibson and Stiassny were the original applicants in the present proceeding but between the date of the hearing before me and the delivery of this judgment they have been replaced as the receivers of MVHL and LQHM. Consent orders were made by me removing them as the applicants to the proceedings and substituting the two companies MVHL and LQHM.
of the total unit entitlement, comprising 16.8 per cent for the management units and
7.4 per cent for its residential units.
[5] The remaining 157 residential units are owned by a number of different registered proprietors, including those 116 unit holders represented by the fourth respondent. Significantly, the combined unit entitlement of those unit holders exceeds 50 per cent.
[6] The other applicant, Lighter Quay Hotel Management Limited (in receivership/liquidation) (LQHM), is a hotel operator who, under the original commercial arrangements, leased all of the residential units and all of the management units from the registered proprietors. In turn, LQHM granted rights to Westin Hotel Management LP (Westin) to utilise the residential units and the management units and to operate a hotel from the building.
[7] LQHM did not meet its obligations to pay the guaranteed rent to the unit owners. As noted by Heath J at [17] of the Low judgment, the only inference to be drawn from this was that LQHM had, for its own purposes, diverted the money it had received and which should have been paid to the unit holders.3
[8] In mid 2010, as a result of this default, a majority of residential unit owners cancelled their leases under s 244 of the Property Law Act 2007. For convenience those unit holders will be referred to in the remainder of this judgment as the cancelling owners. It was at about the same time that the collective interests of the cancelling owners began to be represented by the fourth respondent, Mr Graeme Wilkinson. Neither Mr Wilkinson nor the entities associated with him are unit
holders in the complex.
3 It seems relevant to note at this point that there were links between LQHM and the companies then acting as secretary of Body Corporate 384911 and as the building manager. As I understand it, the “guiding mind” behind both MVHL and LQHM (a Mr McKenna) also had effective control of the Body Corporate Committee.
[9] LQHM also defaulted on its obligations to a secured creditor, BOS International (Australia) Limited, which led to the appointment of the first receivers on 30 June 2010. MVHL was also placed in receivership at this time.
[10] The receivers entered into a “Standstill Agreement” with the cancelling
owners, which had the effect of allowing the continued operation of the hotel until
11.59 pm on 1 September 2010. After that time (that is, from 2 September 2010 onwards) LQHM and Westin were not able to use any of the rooms owned by the cancelling owners for the purposes of the Westin hotel.
The first application for the appointment of an administrator
[11] The above was (in summary) the factual position as it was at the time that the cancelling owners’ application for an administrator under s 40 of the UTA was heard by Heath J on 1 September 2010.
[12] The grounds upon which that application was made were summarised at [24]
of the Low judgment as follows:
a) There is a serious breakdown in the “key relationships” involving a “large majority” of residential unit owners, the Body Corporate secretary, the Body Corporate building manager and Melview, as owner of the management units.
b) As a result of conflict of interest, the majority of unit owners no longer have confidence that the Body Corporate will be run in their best interests.
c) The Body Corporate is currently “dysfunctional”.
d) It is seriously arguable that a number of relevant rules of the Body Corporate ... are ultra vires and unenforceable. On 31 August 2010, Mr Low and his co-applicants filed separate proceedings challenging the vires of particular rules.
[13] Heath J began his judgment by noting that an unusual feature of Body Corporate 384911 was that the owners of the units had, at least initially, been engaged in a common commercial enterprise, namely the operation of the hotel from their collective units for their individual but mutual economic benefit. More particularly he said:
[4] While a body corporate has such powers as are reasonably necessary to enable it to carry out duties imposed on it by the Act and its rules, it has no power “to carry on any trading activities”. Therefore, in determining whether the Court should interfere in the affairs of the body corporate it should, ordinarily, acknowledge the fact that it comprises “a group of people who have no reason to be bound together other than the fact that they happen to occupy, or have some other interest in, a unit plan development created under the Act”. That lack of common interest will generally mean that each proprietor will have differing interests to protect.
[5] However, in the present case, the starting point for analysis is somewhat different. On the one hand, there is a group of absentee owners located overseas (in countries such as Singapore and Malaysia) who acquired their units to participate in a hotel operation that was to provide an income stream, by way of rent paid for use of the apartments. On the other, there were associated companies, under the direction of a Mr McKenna, whose interests were in development of the hotel complex and in making money from services rendered in relation to its operation. For reasons that will become clear, the original common interest in the continued long-term economic success of the hotel has become strained as a result of financial pressures on both groups.
[6] The application to appoint an administrator falls to be determined in the context of those original commercial aims, even though the body corporate itself does not carry on business as part of the hotel management. ...
[14] After discussing the legal principles relevant to a s 40 application (to which I shall return below) Heath J said that he was not satisfied that the Body Corporate was dysfunctional or operating irrationally. While he expressed concerns about the potential conflict of interest that arose within the Body Corporate by virtue of the receivers’ short term aims and the investors’ longer term investment goals he stated:
[42] My impression is that a high level of brinkmanship is being undertaken by both the receivers and the investors. If that were not the case, there would be more serious efforts being taken to negotiate solutions which would meet needs of both groups, namely to maintain the business operated at the hotel in a manner likely to result in beneficial returns to both the receivers’ appointor and the individual unit owners. Instead, the unit owners seek to put pressure on the receivers by withdrawing their apartment units from the hotel and the receivers respond by making it difficult for the individual owners to use their units until the receiverships are resolved. Understandably, each group seeks to exert pressure on the other to maximise prospects of a more favourable outcome. While each party is entitled to take that type of stance, in doing so, they must accept the consequences of their actions.
...
[46] The real dispute, in the battle for negotiating supremacy, is between the applicants and the receivers. It may be that the interests of the applicants can be met by the appointment of two of their number to the committee, at
the Annual General Meeting of the Body Corporate scheduled for 8
September 2010. Both Mr Salmon and Mr Gilbert emphasised, in the context of the democratic principles identified in World Vision, the ability of the
applicants to safeguard their positions in that way. I consider that it is
appropriate, particularly given the closeness in time of the Annual General Meeting, to provide an opportunity for the applicants to vote to appoint representatives at the meeting. Thereafter, it can be seen whether any dysfunctionality arises out of the way in which all protagonists conduct themselves in attempting to make decisions in the best interests of all proprietors.
[15] Ultimately, he concluded:
[47] I am satisfied that it was appropriate for this proceeding to be launched, given the unhelpful responses being made by the Body Corporate secretary and the Body Corporate’s (then) solicitors to proper requests for information. I am also satisfied that the appointment of new solicitors by the Body Corporate has resulted in attempts to restore confidence. Likewise, if one puts to one side the commercial posturing of the two parties, there is an ability for the unit owners to negotiate with the receivers to reach a solution beneficial to both. There are a limited range of solutions open to the parties.
[48] Because of developments after it was filed, I consider that final determination of the application is premature.
Subsequent events
[16] Notwithstanding this muted expression of judicial optimism it is fair to say that both the brinkmanship and the battle for negotiating supremacy recorded by Heath J has continued largely unabated since September last year. Notably, however, the balance of power has shifted, as the narrative which follows shows.
[17] Following the expiry of the Standstill Agreement, the Westin continued to operate its hotel utilising the management units and the (approximately 50) residential units whose owners have not cancelled their leases. As foreshadowed in the Low judgment, there were ongoing negotiations between the receivers/Westin and Mr Wilkinson on behalf of the 116 cancelling owners over the terms on which their rooms might be made available for the operation of the Westin. Ultimately, however, the negotiations failed to bear any meaningful fruit.
[18] While these negotiations were continuing, there were also issues between the receivers and the cancelling owners about the power supply, and access, to the
cancelling owners’ units, both of which had previously been centrally controlled by LQHM. While the merits of the respective positions are a matter for debate, it is not disputed that the effect of it was that between 1 September 2010 and June 2011:
(a) the units owned by the cancelling owners had no electricity; and
(b)the cancelling owners could not use the lifts in the building or access their units.
[19] These issues assume some importance later in this narrative and, more generally, in terms of the present application. More about them will be said later.
[20] In the meantime, on 8 September 2010 the Body Corporate’s AGM was held. It was at that meeting that Mr Wilkinson was first elected as a member of the Body Corporate Committee as the representative of the cancelling owners.
[21] The cancelling owners had also applied for declarations that a number of the rules of the Body Corporate were ultra vires and that, as a consequence, agreements entered into by the Body Corporate with the existing Body Corporate Secretary and Building Manager were void.4 The receivers and the Body Corporate did not oppose that application and Heath J issued a further judgment in relation to that matter on 21
February 2011: Low v Body Corporate 384911.5
[22] As a result of that decision, amended Body Corporate rules were ultimately agreed. In particular the rules relating to the membership of the body corporate committee were changed so that the Hotel Operator was no longer permitted to be a member. Under the new rules, the Committee now comprises:
(a) two members appointed by the owners of the Commercial Units (that is MVHL);
(b) two members appointed by the owners of the Residential Units; and
4 The existing Secretary and Building Manager were, like MVHL and LQHM associated with Mr
McKenna.
5 Low v Body Corporate 384911 [2011] 2 NZLR 263 (HC).
(c) one member elected by the Body Corporate as a whole.
[23] The two receivers were appointed to this newly constituted Committee by MVHL. Mr Wilkinson and Mr Peter Cross were appointed by the Residential Units. Mr Peter Ross has been appointed by the Body Corporate. Mr Wilkinson was also appointed the Chair of the Body Corporate Committee.
[24] On 17 March 2011, Mr Wilkinson gave notice that he was calling a body corporate committee meeting for 25 March 2011. The purpose of the meeting was said to be for the Committee to instruct either the Body Corporate Secretary or Mr Wilkinson to call an extraordinary general meeting (EGM) of the Body Corporate on 6 April 2011. The rules require the Committee to convene an EGM in the event that an EGM is requisitioned in writing by proprietors having more than 25 per cent of the total unit entitlement. Mr Wilkinson had been given such a requisition by those unit holders whom he represented.
[25] The stated purpose of the EGM was (inter alia) to consider resolutions that:
(a) the existing Body Corporate Secretary should be removed and
Mr Wilkinson’s company, Beswick, should be appointed instead;
(b)the agreement with the existing Building Manager should be cancelled and a building management agreement entered into with Beswick; and
(c) LQHM should be removed as Hotel Operator; and
(d) Beswick should be appointed in its stead.
The combined effect of the latter two resolutions would have been that only Beswick would be able to let units to the public.
[26] The receivers were not happy with aspects of these resolutions. At the Committee meeting on 25 March, they said that appointment of a new body corporate secretary and of a new building manager should be the subject of a competitive process and that Mr Wilkinson should not be involved in the granting of
any contract to his own company, Beswick. Mr Wilkinson’s position, however, was essentially that those were matters for the Body Corporate. That was a position in which Mr Wilkinson would of course have felt secure given the fact of his representation of unit holders with over 50 per cent of the unit entitlement.
[27] After the meeting of 25 March, the receivers arranged for a copy of legal advice they had received to be sent to Beswick’s lawyer. The gist of that advice was that the Body Corporate did not have the power to appoint a new hotel operator and that even if Beswick was appointed, it could not have the exclusive rights to let units to the public. The latter proposition was subsequently confirmed by Heath J in a minute dated 5 April 2011.
[28] An EGM duly took place on 6 April 2011. The minutes record that Mr Wilkinson held proxies that represented a little over 50 per cent of the total unit entitlement whereas the proxies held by the receivers’ represented only about 25 per cent of unit entitlement. Other unit holders in attendance held proxies representing approximately 16 per cent between them.
[29] As regards Beswick’s appointment as Body Corporate Secretary, the minutes record that:
(a) three tenders for the appointment had been received;
(b) Beswick’s proposed fee was the lowest ($20,000 plus GST);
(c) Beswick’s proposal had been submitted after Mr Wilkinson had seen the other proposals (including their pricing);
(d)the receivers and Mr Wilkinson did not agree about Mr Wilkinson’s alleged conflict of interest, Mr Wilkinson’s position being that the owners whom he represented knew about his ownership of Beswick and supported that company’s appointment; and
(e) Beswick was appointed (the receivers voting against).
[30] As regards Beswick’s appointment as Building Manager, the minutes record that:
(a) two tenders for the appointment had been received;
(b) Beswick’s proposed fee was the lower ($50,000 plus GST);
(c) Beswick’s proposal had been submitted after Mr Wilkinson had seen the other proposal (including its pricing);
(d)the receivers and Mr Wilkinson did not agree about Mr Wilkinson’s alleged conflict of interest, Mr Wilkinson’s position being that the owners whom he represented knew about his involvement with Beswick and still supported that company’s appointment; and
(e) Beswick was appointed (the receivers voting against).
[31] The resolution appointing Beswick as Hotel Operator was passed. The receivers voted against it on the grounds (inter alia) that the Body Corporate had no power of appointment in this respect. Because of Heath J’s minute, however, Mr Wilkinson voted against the other, related, resolution that LQHM be removed as hotel operator and that resolution was accordingly defeated. Nonetheless the appointment of Beswick as a second hotel operator makes it clear beyond doubt that by this point Mr Wilkinson and the owners he represented were intent on operating a competing hotel from the Viaduct Harbour premises.
[32] Three further resolutions were then proposed by Mr Wilkinson as items of general business. Those resolutions were that:
(a) In the event that another or an additional Hotel Operator and/or Hotel Manager is appointed (whether in addition to or in substitution for Weston Hotel management LP), the Body Corporate Committee is directed to approve from time to time any scheme pursuant to Rule 2.3(h) for signage to be erected or painted on the exterior of the Units or on the Common Property that conforms with the Brand Standards operated by any or all Hotel Operators and any or all new Hotel managers, and to add or remove from time to time any
signage) from any area of Common Property or from the exterior of the Units that does not comply with an approved scheme.
(b) That the Body Corporate Committee is directed to take all reasonable steps including incurring expenditure to engage a new vingcard provider to change all existing vingcards (including vingcards in the Common Property including the lifts) so that all proprietors can gain access to and use their Units.
(c) That the Body Corporate Committee is directed to take all other reasonable steps to ensure that all unit holders can gain access and services to their Units.
[33] The focus of the second and third resolutions was squarely on the issues about the cancelling owners obtaining power and access which I have already mentioned. All three resolutions were plainly critical to the ability of the cancelling owners to establish a second hotel and all were passed by a majority. The receivers again voted against them.
[34] On 4 May 2011, Mr Wilkinson gave notice of a further Body Corporate Committee meeting to be held on 13 May 2011. The substantive matters proposed for discussion at the meeting related to:
(a) signage relating to the operation of “Hotel Viaduct Harbour” on the
exterior and interior of the building in specified locations;
(b)a proposed licence of a small area of common property for a new hotel reception desk for a monthly fee of $10, terminable on 30 days notice; and
(c) the functions that Beswick would perform as Body Corporate secretary.
[35] For reasons that are a matter of dispute, the receivers did not attend the meeting on 13 May.6 Their absence meant that the meeting was inquorate. A further
EGM was instead called for 25 May 2011.
6 It appears that Mr Stiassny advised Mr Wilkinson that he could not attend on 13 May and asked for the meeting to be held on 12 May. 12 May did not suit Mr Wilkinson and the meeting was not rescheduled.
[36] Resolutions in relation to the three matters listed in [34] were discussed and put to the vote at that EGM. The receivers voted against the resolutions and had recorded their view that decisions of that sort were properly for the Committee, not the Body Corporate as a whole. The receivers agreed however to a resolution relating to the termination of a previous Building Management contract and the negotiation of a settlement with the previous Manager.
[37] The following further resolution was put to the meeting by Mr Wilkinson and also passed by virtue of the proxies held by him (the receivers voting against):
Graham Wilkinson as Chairman of the Body Corporate Committee is directed and authorised to take all steps he considers necessary to implement the resolutions passed under ... Other General Business ... as set out in the minutes of the AGM of 6 April 2011 [being those resolutions quoted at [32] above relating to signage, access to and use of units, and service to units] including to instruct and authorise service providers (and their contractors and employees) to enter onto the common property of Body Corporate
384911 to undertake all matters required to implement those resolutions.
[38] It was pursuant to this resolution that on 30 May 2011 Mr Wilkinson:
(a) Disabled the security card system in the elevators in the hotel in order that the cancelling owners could obtain entry to the floors upon which their units were situated. A consequence of this was that members of the public could for a short period access any floor of the building; and
(b)Turned on the power supply to the rooms owned by the cancelling owners. Because LQHM remained the only account holder and because the units were not separately metered, this gave rise to the possibility that LQHM would be liable for the cost of any electricity
used by the cancelling owners.7
[39] On 1 July 2011 Mr Wilkinson, through Beswick, began operating the second hotel, Hotel Viaduct Harbour, using the rooms owned by the 116 cancelling owners.
7 Although interim relief was originally sought in relation to these two matters, by the time of the hearing before me the issues had largely been resolved. While they are still relied upon by the applicants in the context of the s 40 application, no discrete orders are required.
There are thus now two hotels operating from the building. There is signage relating to both Hotel Viaduct Harbour and the Westin on the exterior of the building and there is a reception desk for Hotel Viaduct Harbour situated on the common property pursuant to the licence referred to above.
The present application
[40] The application seeks the appointment of an administrator who would:
Have and exercise the powers of the Body Corporate and the Body Corporate Committee and to be subject to the duties of the Body Corporate and the Body Corporate Committee to the exclusion of the Body Corporate and the Committee as provided for in s 40(3) of the Unit Titles Act 1972.
[41] Numerous grounds are given in support of the application. They begin with a broad allegation of body corporate dysfunctionality which has at its heart the contention that the Body Corporate is being controlled by and operated exclusively in the interests of and for the benefit of the cancelling owners and the second, third and fourth respondents, and in a manner adverse to the interests of other unit owners. In short, it is said that the cancelling owners are using their majority vote to advance their own interests and commercial position through the Body Corporate in a way which is “inappropriate and inequitable” to the other owners.
[42] The particular matters raised in support of these general contentions are that: (a) the cancelling owners (through Mr Wilkinson) have voted to appoint:
(i) Beswick as Body Corporate Secretary, building Manager and a
Hotel Operator;
(ii) Mr Wilkinson as a Committee Member;
(iii)Hotel Lighter Quay to operate a hotel using the units owned by them;
(b)the Wilkinson entities are purporting to carry out the duties of the Body Corporate Secretary and the Building Manager without reference to the Body Corporate Committee;
(c) Beswick has, in its capacity as Body Corporate Secretary, acted without authority to facilitate the erection of signage for the operation of the new hotel;
(d)as convener and chairman of the Body Corporate EGMs, Mr Wilkinson has orchestrated and participated in decisions of the Body Corporate in which he has a personal interest and which are not in the interests of the Body Corporate as a whole including decisions:
(i) facilitating the operation of a hotel by Beswick and Hotel
Lighter Quay;
(ii)granting a licence over common property at the uncommercial rate of $10 per month for the purpose of establishing a reception area for the hotel;
(iii)purportedly delegating powers to himself to take all steps he considers necessary in relation to the erection of hotel signage, the replacement of the security system in the hotel and the provision of services to the cancelling unit holders; and
(e) one or all of the Wilkinson entities acted without authority in disabling the elevator security system (and compromising the security of the residential units) and in connecting the cancelling owners’ units to an electricity supply that was charged to LQHM’s electricity account.
[43] The application concludes by stating that the applicants have no confidence that the cancelling owners and the second, third and fourth respondents will properly
and impartially act in the interests of the wider body corporate including the owners of the other residential units and the management units.
Law
[44] Section 40 of the UTA relevantly provides:
(1) The body corporate, a creditor of the body corporate, or any person having a registered interest in a unit, may apply to the Court for the appointment of an administrator.
(2) The Court may, in its discretion on cause shown, appoint an administrator for an indefinite period or for a fixed period on such terms and conditions as to remuneration or otherwise as it thinks fit. The remuneration and expenses of the administrator shall be an administrative expense within the meaning of this Act.
(3) The administrator shall, to the exclusion of the body corporate and the committee, have and exercise the powers of the body corporate and the committee, and be subject to the duties of the body corporate and the committee, or such of those powers and duties as the Court orders.
...
(7) Nothing in this section shall permit an administrator to do anything which requires a unanimous resolution or prevent the passing of a unanimous resolution; but, without restricting the generality of subsection (3) of this section, the administrator shall, subject to any order of the Court, be entitled on his own initiative and to the exclusion of the body corporate to do any act which under the rules may be done by special resolution only.
...
[45] The ambit of the s 40 power was considered by Heath J in the context of his decision on the first application involving Body Corporate 384911. In that decision he said:8
[29] The Court’s power to appoint an administrator must be read in the context of the scheme of the Act. I discussed that scheme in detail in both World Vision of New Zealand Trust Board v Seal and Body Corporate
188529 v North Shore City Council. The Act makes it clear that individual proprietors retain responsibility for their own property, whereas the Body
Corporate is required to deal with all common property. So, for example, proprietors of all units are empowered to sell or lease part of the common property or to grant an easement over all or any part of it, provided they act
8 Low v Body Corporate 384911 HC Auckland CIV-2010-404-5280, 2 September 2010.
together as a common group, as opposed to an unruly situation that could develop were an individual proprietor to deal with “common property” on its own.
[30] In Body Corporate 188529 v North Shore City Council, I said:
“[97] The fundamental theme of the statute is the distinction between the individual units (for which each registered proprietor takes responsibility) and common property (the domain of the body corporate). The distinction is logical. Individual registered proprietors can deal only with individual property whereas “common property” is owned by all proprietors and must be managed by the body corporate for the common good of all. (my emphasis)”
[46] Heath J then went on to refer to another decision in which he had discussed the basis upon which the s 46 jurisdiction to cancel a unit plan and dissolve a body corporate might be exercised. Then he said:
[33] Because s 40 envisages a less critical situation than does s 46, it would be unwise to attempt to define exhaustively the circumstances in which the discretion to appoint an administrator should be exercised. Parliament has provided an open-textured approach for the Court to apply, by using general words as a threshold test. All that is required is for the Court, “on cause shown”, to exercise its discretion to appoint an administrator. The nature of the discretion is emphasised by the ability to appoint a person for a fixed or indefinite period and on such terms as the Court thinks fit. The Court’s ability to limit those powers of a body corporate and the committee that the administrator may exercise supports that view.
[47] Heath J then goes on to refer to his decision in World Vision in which he held that rules of a body corporate were designed to create a “democratic framework” within which the affairs of a body corporate are managed and articulates the underlying principles that could be discerned from the Act. In that decision he also said that because owners will, on occasion, disagree:9
i) This Court is given power to dispense with the need for a unanimous resolution if a particular act is supported by 80 per cent or more of those entitled to vote: s 42.
ii) Disaffected members of the body corporate in a minority can seek relief against any resolution passed on the grounds that it “would be inequitable for the minority”: s 43.
[48] His Honour then noted that two earlier New Zealand decisions in which the s 40 power had been in issue did not identify any principles upon which the
9 World Vision of New Zealand Trust Board v Seal [2004] 1NZLR 673 (HC) at [51].
discretion should be exercised. But there were two Australian decisions which, he said, were more helpful: Filaria Pty Ltd v Proprietors of Units Plan 932 and McKinnon v Adams.10 Both cases involved a broadly worded statutory discretion similar to s 40.
[49] The former case will be considered in detail below. In the latter case the Supreme Court of Victoria held that to justify appointment of an administrator, a body corporate:11
... must be affected by some incapacity, or must be acting so dysfunctionally as to render the provision of appropriate services to unit holders and/or care of the common property either non-existent, or so beset by difficulties as to render the body corporate unable to function at what the Court considers to be a satisfactory level. ...
[50] Heath J then concluded:
[37] Despite the language employed, I do not think the two Australian Judges intended to limit the circumstances in which the discretion to appoint an administrator should be exercised. Rather, their observations should be read in the context of the particular disputes they were deciding. They were illustrations of an approach on different factual premises, rather than any attempt to exhaustively define the circumstances in which the Court could act. In my view, the general discretion (while it must be exercised in a principled way) should not be fettered. Everything turns on the facts of the particular case, with the Court’s discretion being informed primarily by the functions of a body corporate and the ability of those with responsibility for its affairs to carry out their duties fairly, against the background of the underlying principles on which the Act is based.
[51] The circumstances of the decision in Filaria bear a number of similarities to those which give rise to the present application and the decision was, indeed, relied on by both the applicants and the respondents before me. Accordingly further, more detailed consideration may be instructive.
[52] Filaria involved the hotel originally known as “Canberra International Hotel”. In 1993 Filaria Pty Ltd purchased the hotel and, with a view to converting the rooms into separately titled units for sale, registered a unit plan. Some units were
sold to investors but Filaria retained ownership of 42 units.
10 Filaria Pty Ltd v Proprietors of Units Plan 932 [2002] ACTSC 8 and McKinnon v Adams [2003] VSC 116.
11 McKinnon v Adams at [20]
[53] As part of the arrangement, six of the unit-titled areas were placed into a trust structure. These units included the hotel restaurant and kitchen, bar, function rooms, office and shop and were thus the equivalent of the management units in the present case. They were referred to in the trust deed as the “ROF units”. The effect of the trust deed was that after a specified period, the trustee held the ROF units on trust for all of the individual unit holders of the hotel.
[54] All unit holders then agreed to lease their units to a company known as Jaywood which was associated with Filaria. Jaywood entered into a hotel management agreement whereby it would manage all the units as a hotel/motel with serviced apartments. Jaywood was to occupy and manage the ROF units and had the right to use common property. The Body Corporate was also a party to the hotel management agreement which was for a period of five years.
[55] Jaywood was subsequently not reappointed as hotel manager by a majority of unit holders who instead appointed the “Premier Group” in that role. But Filaria declined to do so in relation to its units and, rather, chose to manage those units separately, under the name “Budget International Hotel”. The end result was that, just as in the present case, two separate hotel entities let rooms (and facilities) within the same unit title in competition with each other.
[56] Filaria brought proceedings seeking the appointment of an administrator essentially on the basis that there was, by virtue of the competing commercial interests of two groups of unit holders, a conflict inherent in the operation of the Body Corporate.
[57] The Supreme Court of the Australian Capital Territory (ACT) declined the application. In doing so, Miles CJ noted that the ACT equivalent of s 40 gave no guidance as to the kinds of circumstances in which “cause” might be shown. In that respect he said (at [8]) that:
However, general equitable principles applied by the Court under s 25, s 26 and s 31 of the Supreme Court Act as well as similar principles applied by Australian courts exercising jurisdiction to appoint receivers and managers under the Corporations Law seem to me to be appropriate, and counsel for the parties accepted such an approach. ...
[58] The Chief Justice then noted the prohibition under the ACT legislation on bodies corporate engaging in trading activities12 but said that while as a matter of law it was correct to say that the body corporate was not in the business of running the hotel:13
[1] ... it does not appear to have represented the view of either the plaintiff or the body corporate when they entered into the management agreement by which the plaintiff agreed to manage the hotel business on behalf of the body corporate. Ms Phillips states in her affidavit sworn 4 September 2000 that the body corporate entered into an agreement with Jaywood to “manage the business of the Hotel on its behalf”, indicating an understanding that the body corporate had been running the business or at least was entitled to do so.
[59] That point was not, however, pursued further in the judgment.
[60] In the present case there is no direct contractual relationship linking the Body Corporate and either of the hotel businesses. While in submissions the applicants suggested that Body Corporate 384911 was in breach of s 16 of the UTA, that was not one of the pleaded grounds for the application. It can, however, be noted in passing that it was the s 16 prohibition that (in my view quite rightly) gave rise to the receivers’ concerns about the body corporate’s power to appoint Beswick as a hotel operator. But the absence of a Body Corporate power to appoint does not of course mean that the cancelling owners could not independently have engaged Beswick to act for them in that capacity.
[61] At [32] of his judgment Miles CJ addressed one of the principal arguments advanced on behalf of Filaria in favour of the appointment of an administrator. He said:
It was submitted that the affairs of the body corporate were based upon the substratum of fact which it had been assumed by all concerned would continue but which had been destroyed. The assumption was that the units were all part of a single hotel enterprise operating out of the buildings comprised by the units and the common property, and that that single hotel enterprise would continue so to operate. The assumption is no longer valid because there is no longer a single hotel. On the contrary there are two hotels operating out of the same building in competition with each other, one serving the interests of the majority unit holders, the other serving the interests of the plaintiff. Reliance was placed upon Re Co-operative
12 An equivalent provision is found in s 16 of the UTA.
13 At [31].
Development Funds of Australia Ltd (No 3) (1977 -78) 3 ACLR at 437, a decision of Sangster J in the Supreme Court of South Australia. In that case an order was made to wind up a company on the “just and equitable” ground which, so it was submitted, was found to be in similar circumstances to those of the body corporate in the present case. The failure of the substratum of a company was discussed at 469 - 475. On this issue it is sufficient to say that the present case is not one in which there is anything comparable to a company prospectus. The evidence is insufficiently clear to establish a “main and independent” object of the unit holders to be the operation of the Canberra International Hotel. In any event there is one distinguishing factor which stands in the way of the appointment of an administrator.
[62] By contrast, the current application was not advanced on a “failure of substratum” basis. In my view it is at least arguable that there has been such a failure. But even if (unlike in Filaria) there was an evidential foundation for such an argument, I am not certain that the exercise of the Court’s power under s 40 power would be apt. Failure of that kind would not be cured simply by putting someone else in charge. Rather (and as the cases in the company law context show)14 substratum failure is likely to warrant the liquidation of the enterprise which was built upon the original substratum. Thus, to the extent the analogy applies in a unit
title context, it seems to me that the appropriate application would be one brought under s 46, not s 40.
[63] In any event, the “distinguishing factor” referred to by the Chief Justice as a further justification for rejecting the analogy with substratum cases was his view that the circumstances that gave rise to Filaria’s application were of Filaria’s own making. Thus at [33] he said:
Neither the other unit holders nor the body corporate asked the plaintiff to set up the Budget International Hotel. The evidence suggests that they have been against it from the start. Whilst it was the majority unit holders and the body corporate who took the decision to oust Jaywood from the position of manager, the departure of Jaywood did not affect the rights of the plaintiff as a unit holder and member of the body corporate. ...
[64] Again there seems to be a degree of analogy with the present case. That is because it is, I think, fair to say that the circumstances giving rise to the present
application are, at their root, of the applicants’ own making. It is, in particular, the
14 In a New Zealand context see , e.g., Jaycue Investments Ltd (in liq) v J Fox Developments Ltd HC Auckland M952/95, 2 April 1996.
actions of LQHM which led to the destruction of the common commercial purpose that had initially united the unit holders and (consequentially) Body Corporate
384911. Had that purpose not been destroyed, there would be no rival hotel operation.
[65] The other principal submission made by Filaria was addressed by the Court from [35]to [38] as follows:
35. There is also the submission of Mr Erskine that in general the affairs of the unit holders are now such that the body corporate must find itself in a conflict of interests and that with the two competing hotels in the same building, the administration of the common property cannot be properly carried out by a body corporate which is controlled by unit holders whose interests are adverse to those of the plaintiff as far as running the two hotels is concerned.
36. The difficulty with this submission is that on the evidence it has not been shown to my satisfaction that the body corporate has taken any decisions or done or authorised any act in which the suggested conflict has resulted in anything adverse to the plaintiff in its position as a unit holder. The dismissal of Jaywood as manager was not an act taken against the plaintiff and did not affect its interests as unit holder. There has not been demonstrated any threat of the body corporate acting in such a way as to favour improperly the interest of the majority unit holders over those of the plaintiff.
37. Furthermore, the existence of a conflict of interest is not of itself necessarily sufficient to disqualify a person from office of a fiduciary nature. It was conceded that directors of companies are commonly shareholders in that company. They are entrusted with making decisions, as directors, in the interests of the company as a whole. It is not unless they are shown to be favouring their own interests over those of a company as a whole that any question arises as to their removal from office because of their conflict of interest.
38. In my view, nothing has been shown on the evidence to constitute anything like improper conduct on the part of the body corporate or of any of the members of the committee. Whilst the exercise of the discretion under s
92 appears to be very wide, the application, by analogy, of the principles of equity and the law of corporations does not furnish any reason as far as the
conduct of the body corporate is concerned to justify its replacement by an administrator. The administration of the units and the common property do
not require the appointment of an administrator. The majority unit holders are, on the face of it, entitled to conduct the affairs of the body corporate. The body corporate should not have to have an administrator appointed to
carry out that task unless the circumstances warrant taking responsibility from the body corporate and placing it in the hands of some other party. The
circumstances, in my view, do not require the appointment of an administrator.
[66] This aspect of the decision is of particular interest because the unit title cases are replete with references to the need for a body corporate to act for the proprietors’ mutual benefit. Those references formed the basis for the applicants’ submission that Body Corporate 384911 is required to act in the interests of all unit holders or not at all. As Filaria makes clear, however, that is either an over-simplification or an abstract counsel of perfection that may not accord with legal and factual reality. In the present circumstances, for example, such an obligation would arguably mean that the Body Corporate could not make a decision that permitted the common property to be used for the purposes of either hotel and thus the purposes of any of the unit holders.
[67] It seems to me that the requirement that a body corporate act democratically (by majority rule) exists precisely because it may not be possible for a body charged with governing a group of people with potentially disparate interests to exercise its functions in a way that will further those interests equally. Even if democracy can be regarded as the model of governance most likely to further the common good that does not mean that the good of each of its members will or can in all cases be furthered. It is no doubt for that reason that Miles CJ held in Filaria that a body corporate is not rendered ripe for the appointment of an administrator simply because it has failed to act in the interests of a certain group of unit holders. There is thus an additional requirement that its failure to do so be in some way “improper”.
[68] While not going so far as to suggest that the “cause shown” threshold in s 40(2) will always need to involve the existence of impropriety in the conduct of the affairs of the relevant body corporate, the concept of impropriety nonetheless constitutes a useful starting point in what otherwise risks being a somewhat rudderless analytical exercise. But if that is to be adopted as a starting point, a question then arises about what might constitute “impropriety”.
[69] First, it might be thought that there is a presumption that decisions made by a body corporate both democratically and intra vires are not improper. On the other hand, if there are questions about the means by which the proprietors have been persuaded to lend their vote to the majority (for example if questions of deception, misinformation or coercion arise) then that presumption would be unlikely to
prevail. That then is one further matter that may bear further scrutiny in the present case.
[70] Secondly, a focus on impropriety might also suggest consideration of whether a body corporate’s actions or decisions were taken or made in bad faith or for an illegitimate purpose. Plainly, for example, a body corporate act or decision whose sole or primary purpose or effect is to harm the interests of minority unit holders would invite a finding of impropriety, notwithstanding that it represents the will of the majority. Similarly, even if an act done or decision taken has the principal purpose or effect of furthering the legitimate interests of the majority, it might nonetheless be improper if it also causes unnecessary or gratuitous injury to minority proprietors. Those, too, are matters that seem to me to be raised by the present application.
[71] In summary, I consider that the above review and analysis suggests that, in the present case15, a number of matters are potentially relevant to whether “cause” for the appointment of an administrator has been shown. They are:
(a) the existence of any undemocratic or ultra vires decisions; (b) the existence of any dysfunctionality or deadlock;
(c) the existence of any majority decisions that:
(i)have been brought about by the improper influence of a third party;
(ii)deliberately and/or unnecessarily harm the interests of the minority.
[72] The mere existence of one or more of these matters would not automatically lead to the appointment of an administrator. The reasons for their existence may be
relevant, as would be any alternative remedies. Moreover, it must also, I think, be
15 For the reasons given by Heath J in his first Low decision the list is neither to be regarded as exhaustive nor as applicable in all circumstances.
asked whether an administrator would be capable of running the body corporate (and the committee) in a way that did not itself cut across the principles contained in the UTA.
Application to the present facts
[73] The issues I have set out at [71] above provide the focus of the discussion that follows.
Undemocratic or ultra vires decisions
[74] On my understanding of the applicants’ position, they do not allege either:
(a) that Body Corporate 384911 is acting undemocratically (indeed it is the fact of majority rule that gives rise to their complaint); or
(b)that Body Corporate 384911 is acting ultra vires either the Act or the rules.
[75] As regards the former point, the UTA contains a specific remedy for minority unit holders who consider that decisions have been made by the Body Corporate, the effect of which, would be inequitable to them. Section 43 has not, however, been invoked by the applicants in this case.
[76] As regards the latter point, the only relevant part of the application is that in which it appears to be alleged that there is something unlawful about decisions being made at EGMs rather than by the Body Corporate Committee.16 However I am unable to see the merit in that contention. While it may be the expectation that the
day to day Body Corporate decisions will be made by the Committee, decisions
16 I have already noted above that while s 16 of the UTA (which prohibits it from carrying on trading activities) was referred to in submissions, the application does not allege that the Body Corporate’s actions are in breach of that section. The application does also contain allegations that certain acts have been done “without authority”. Those allegations are levelled at the second, third and fourth respondents, not the Body Corporate.
made by majority vote at a properly convened EGM must surely have more, if not equal legal authority.17
Dysfunction
[77] Similarly, and notwithstanding the general allegation to the contrary in the application, it is plain that the Body Corporate is performing its functions, namely maintenance and administration of matters in which the unit holders have a common interest and, in particular, the common property. The Body Corporate is not deadlocked and, as I have said, no tenable questions of undemocratic or ultra vires actions have been raised. While I accept that the circumstances of its operation are unusual (although, as Filaria shows, not unprecedented) any dysfunction or abnormality in them have not been caused by the way in which the Body Corporate is presently acting.
[78] Rather, and as I have already noted, the present situation arises as a result of LQHM’s actions. If by its actions, it had not destroyed the common commercial purpose that had formerly existed between all the unit holders, the Body Corporate would not have diverging (let alone competing) interests.
[79] The mere fact that Body Corporate 384911 has made decisions that have the effect of permitting or even facilitating the cancelling owners to pursue their commercial interests does not in my view constitute “cause”. That is so even if the competing commercial interests of the applicants are, as a necessary consequence, damaged thereby. But there are nevertheless aspects of what has occurred here which do give rise to potential concerns in terms of the kinds of considerations I have identified and which therefore warrant further consideration. It is to these
which I now turn.
17 One factual matter about which I remain unclear is whether the cancelling owners had sufficient representation on the Committee to ensure that their wishes would prevail in that forum. The applicants’ allegation in this respect suggests that this is not the case.
Appointment of Beswick/Hotel Lighter Quay
[80] First, there is an issue about whether Mr Wilkinson’s pervasive influence and involvement, coupled with his ownership interests in the second and third respondents, has led to decisions being taken by the Body Corporate that were in his interests rather than in the interests of (even the majority) of its members. Mr Wilkinson’s commercial well-being could never be a legitimate concern of the Body Corporate and furtherance of it in a way that is any more than consequential or ancillary to the furtherance of the (majority) unit holders’ own interests might well be improper. Similarly, if it could be shown that Mr Wilkinson had, in pursuit of his own interests, deceived or misinformed the cancelling owners in order to obtain their (majority) support, cause for intervention could exist.
[81] The evidence before me indicates that Mr Wilkinson almost certainly will personally benefit from the decisions appointing the second and third respondents as Body Corporate Secretary, Building Manager and Hotel Manager respectively. Equally, however, it shows that those decisions were made by the Body Corporate:
(a) in circumstances where a new Secretary and Building Manager were in fact required;
(b) with full knowledge of Mr Wilkinson’s interest in those companies.
It also appears that Beswick has some previous experience in such roles.
[82] The reality, of course, is that the cancelling owners wish Mr Wilkinson (or entities controlled by him) to act on their behalf. There is no evidence that he has deceived or misled them in order to gain their support. While I have noted at [60] above that the involvement of the Body Corporate in the appointment of a Hotel Manager might have been in error, I have also there noted that the same result could have been achieved just as easily in another way. I do not intend to consider that aspect of the applicants’ complaint further.
[83] As to Beswick’s appointment as Secretary, the general nature of that role has been considered by Heath J in Body Corporate 318566 v Strata Title Administration Ltd (No 2) where he said:18
[10] In the context of the Body Corporate’s duty to manage and administer the common property and to do all things reasonably necessary for the enforcement of the rules, it has power to appoint a secretary. A secretary is engaged to carry out general administrative functions and to undertake such other functions as may, from time to time, be delegated to it by the Body Corporate. Rule 31 of the default rules in Schedule 2 accurately captures the secretary’s primary role.19 In my judgment of 17 March 2009, I said:
“[32] The function of the secretary shall be to keep proper books of account in which shall be kept full, true, and complete accounts of the affairs and transactions of the body corporate and to carry out such other functions as may from time to time be delegated to him by the body corporate.
[33] In the absence of an express delegation requiring the secretary to perform other duties, the secretary acts as an administrative functionary to relieve individual proprietors of the need to manage those aspects of its activities that fall within rr 31 and 31A of Schedule 2. While it has become common for body corporate secretaries to be given responsibility for managing such things as “leaky home” claims, that is because the individual proprietors have elected to delegate that function. The fact that such delegations may occur does not alter the nature of the secretary’s function. The Body Corporate decides what an appointed secretary may do, not vice versa. That is confirmed by rr 4-13 of Schedule 2, which deal with the duties and powers of the Body Corporate that can be exercised by an owners’ committee.”
[84] Put at the most general level, it is entirely orthodox for a secretary to be chosen by a majority of unit holders. And given the limited nature of the secretarial function, it is difficult to see how minority interests are specifically jeopardised by Beswick’s appointment by and of itself.
[85] On the other hand, and although there is no requirement in the rules for the secretary to be unconnected with any of the unit holders20 it is perhaps unusual and undesirable for a secretary to be potentially so plainly the instrument of the majority. That is particularly so in circumstances where there is such a deep schism between two groups of owners and where the schism has such clear substantive
consequences. For example, an independent, professional secretary would be more
18 Body Corporate 318566 v Strata Title Administration Ltd (No 2) HC Auckland
CIV-2008-404-6294,12 June 2009.
19 Although the default rules do not apply to Body Corporate 384911, the rules adopted by it are the same in this respect.
20 As in the default rules, the secretary of Body Corporate 384911 can be one of the proprietors themselves.
likely to question any tasks delegated to it by the Body Corporate that appeared unfairly (or improperly) to favour that majority.
[86] Also of concern, perhaps, is the basis upon which the Wilkinson entities were able to submit the lowest cost proposals for performing the relevant secretarial and management services and the ongoing potential effect of that. It is not, I think, disputed that Mr Wilkinson used his “inside knowledge” (obtained as a result of being a Committee member) to achieve the appointment of Beswick.
[87] So although the appointment of Beswick carried with it the benefit to all proprietors of its lower fee, the circumstances carry with them an inherent risk of abuse. For example, there is more to being a good body corporate secretary or building manager than charging low fees. The advantage obtained and used by Mr Wilkinson may have misled the Body Corporate in selecting his companies when the other contenders might have objectively done a better job, albeit for slightly more.
Security and electricity
[88] Next, there are issues relating to the actions of the Body Corporate through the Wilkinson entities in turning off the security system and reconnecting the electricity supply to the cancelling owners’ units. It is possible that those actions, particularly in relation to security and access, were (at least arguably) unnecessarily adverse to the interests of the Westin group of unit holders.
[89] While the applicants contended that there were alternative, less drastic, means of achieving the same result, Mr Wilkinson’s actions need to be seen in the context of the fact that the cancelling owners had had no electricity or access to their units for the previous nine months. A conclusion that, by permitting that state of affairs to pertain for that period, the Body Corporate was in breach of its statutory
functions and duties21 seems almost inescapable. And although it seems that there
had been previous negotiations between Mr Wilkinson and the receivers/LQHM over
these issues it was plainly not in the applicants’ interests to advance matters quickly.
21 Ensuring rights of access and the supply of essential services to unit holders are in my view both properly within the ambit of core Body Corporate functions.
And the solutions proposed by the applicants appear to me to have been costly and time-consuming for the cancelling owners. I therefore accept on the evidence that something of a stalemate had arisen and that the principal purpose of what was done was to break that.
[90] As well, there is no evidence that either the temporary absence of lift security or the turning on of the electricity caused any actual harm to the Westin interests and as I have noted both these issues have in fact now been resolved.
Lease of common property
[91] Lastly, there is the issue about the decision to lease part of the common property for use as a reception desk by the new hotel. Again I do not regard this as problematic by and of itself. I accept, however, that if it could be said that the lease was granted to the new hotel operator by the Body Corporate at well below market rates, there might be cause for concern. While $10 per month intuitively seems low, Mr Skelton stressed that the lease relates to a very small area (some 1.5 square metres) and quite correctly submitted that there was no evidence before me that the rate is not a market one.
[92] Lastly, I record that I do not regard the issues about signage for the new hotel are of any moment here. Any adverse consequences that might flow to the Westin proprietors from that are in my view solely a function of the reality of the competing hotel operation. There is no question that the Westin signage is permitted to stay in place.
Conclusions
[93] On the basis of the above analysis, I am prepared to conclude that there has been minor impropriety on the part of the Body Corporate in relation to some of the matters raised by the present application. But as stated by Heath J in the first Low judgment, the application also needs to be viewed in the unusual commercial context in which it is made. The cause of the schism and the fact that there is in my view
nothing in law to prevent the cancelling owners from setting up a competing hotel business appear particularly relevant.
[94] I have also given careful thought to whether “cause” might nonetheless be said to have been shown simply by virtue of this dispute having gone on long enough. The removal of Mr Wilkinson and his interests from any direct role or involvement in the affairs of the Body Corporate might make for a less bumpy ride in future.
[95] But the reality would remain that the cancelling owners wish and are entitled to operate a rival hotel from the unit titled premises and that they also wish, and are entitled, to avail themselves of Mr Wilkinson’s assistance in that respect. It seems to me that it is the pursuit of this commercial aim which lies at the heart of the applicants’ concerns.
[96] Perhaps more significantly, I find it difficult to see that the appointment of an administrator would put an end to that pursuit or even render it ultimately less successful. An administrator would be required to act within the four corners of the UTA and the Body Corporate rules. I do not for one minute think that he would be entitled to ignore the will of the majority.
[97] Importantly, in the event that an administrator is not appointed and specific majority decisions are made by the Body Corporate that are adverse to the applicants, they have a specific remedy under s 43 of the Act. Inequity (if not iniquity) must, of course, be established.
[98] In the end, I consider that the application for the appointment of an administrator must be dismissed, for the reasons I have given.
Costs
[99] The respondents are entitled to costs on a 2B basis.
Rebecca Ellis J
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